Tim Larsen has worked as an attorney at the agency for eight years and alleges that Alvarez, who is African American, repeatedly passed over Larsen, who is white, for promotions and plum assignments in favor of other African American employees. Larsen says Alvarez used racist language against him, threatened to throw him out a window and threatened to fire him after he complained.

Larsen's amended complaint filed in San Francisco Superior Court says the city of San Francisco was negligent in hiring Alvarez despite previous reports of similar mistreatment of employees at his previous jobs in Oregon and Texas - and that the city has continued to show negligence in allowing Alvarez to remain in his position.

A spokesman for the city attorney's office said the city has not yet been served with the amended complaint and cannot comment on the case. Spokeswomen for the Housing Authority and the mayor also declined to comment.

Contract allegations

Larsen's amended complaint also contains new allegations against Alvarez for illegally awarding contracts to his favored recipients and says that when Larsen acted as a whistle-blower by reporting the contract improprieties to unnamed "government authorities," Alvarez retaliated against him.

According to Larsen, Alvarez would have a favored contract recipient in mind, but if his or her bid didn't come back the lowest, he'd put out a second invitation for bids.

"Mr. Alvarez or his agents communicated with such preferred contractors in order to tell them what to bid," according Larsen's lawsuit.

Alvarez has come under intense scrutiny in recent weeks due to three lawsuits filed against him by his own employees. In addition to Larsen, who is on medical leave due to stress, another lawyer for the agency has sued for being fired after he took a two-week paternity leave. A third employee sued because she says she was fired for going on worker's compensation leave after knee surgery. Dozens more employees have taken complaints about Alvarez's leadership to Mayor Ed Lee's staff.

Lee, who helped hire Alvarez in 2008, has asked former City Attorney Louise Renne to conduct an investigation into the allegations.

Lee has said that he has complete confidence in Alvarez, and the mayor's name was used in a news release Monday touting the agency's credit rating, which was upgraded to A+ from an A. That means the agency has "a strong capacity" to meet its financial commitments; scores of AAA and AA are higher, and the scale decreases to D.

But the credit analyst who determined the rating said it's an average score for a housing authority and that the San Francisco agency's financial performance, one component used to factor the overall credit rating, was actually dismal.

Rose Dennis, a spokeswoman for the Housing Authority, however, called the rating "significant. ... It's something that Mr. Alvarez is extremely happy about. ... What we have to do is continue the ascent - that's the goal."

Reason for improvement

According to Lawrence Witte, a credit analyst for Standard and Poor's, the improved rating came because the financial services company changed its criteria for calculating housing authorities' ratings - not because of anything the San Francisco agency did.

The company assigns credit ratings to 18 housing authorities in the country, and Witte said San Francisco's is average. Nine other agencies got the same score, five scored higher and three scored lower.

Witte said the San Francisco Housing Authority doesn't have much debt and is able to pay its creditors. It also scored well because it is in great demand in a city with incredibly high housing costs and more than 27,000 people on its waiting list for public housing.

But the agency got the worst possible score in the narrower category of financial performance, which Witte said could be because the agency spends so much on operations and administrative expenses. The agency received a middling score on management because a strategic plan adopted by the agency in 2011 still isn't off the ground, Witte said.

"As far as making that strategic plan really operate or function on a day-to-day basis, we're not convinced of that," he said, noting other housing authorities are doing more to build affordable housing and to modernize units.